Uber and Lyft have built multi-billion dollar businesses by disrupting the traditional taxi and transportation industry. With the convenience of smartphone apps, their rideshare platforms quickly spread to cities across America and globally.
But the secret to Uber and Lyft's rapid growth and profitability lies in a controversial worker classification. Rather than treating the drivers as employees, these companies consider them to be independent contractors - running their own businesses.
This contractor model allows Uber and Lyft to legally avoid paying employment taxes and providing basic worker protections like minimum wage, overtime, and paid sick leave. It's a lucrative loophole that has sparked legal challenges from multiple states who argue the companies are violating long-standing labor laws.
Government audits in Massachusetts, New Jersey, and California, among other places, have determined that Uber and Lyft owe hundreds of millions of dollars in unpaid unemployment insurance and disability fund contributions based on their contractor classification.
In this video, we look at how contractor labeling enables Uber and Lyft to avoid paying their fair share of taxes. We'll examine the costs this tax avoidance imposes on workers, law-abiding businesses forced to subsidize the deficit, and the social safety nets millions rely upon.
